Cypress Semiconductor Corp. (NASDAQ:CY) announced its second quarter 2015 results, which included the remarks below from its president and CEO, T.J. Rodgers. Highlights for the quarter included (financial highlights are non-GAAP):

Revenue of $491.0 million, at the high end of guidance

Gross margin of 41.0%, in line with expectations

Earnings per share of $0.15—the highest quarterly earnings in more than two years for the combined pro forma company

Annualized synergies achieved ahead of schedule: $51.6 million

Divestiture of mobile touchscreen business for $100 million announced

Dividend of $36.7 million ($0.11 per share, equivalent to 3.7% annualized yield) declared and paid with favorable tax treatment

Fellow shareholders:

Our revenue and earnings for the quarter are given below, compared with those of the prior quarter and prior year*:

(In thousands, except per-share data)

NON-GAAP**

GAAP

Q2 2015

Q1 2015

Q2 2014

Q2 2015

Q1 2015

Q2 2014

Revenue

$491,028***

$209,137

$183,601

$484,778

$209,137

$183,601

Gross margin

41.0%

-1.3%

54.0%

28.5%

-17.0%

51.9%

Pretax margin

11.4%

-42.0%

14.9%

-18.1%

-120.2%

5.2%

Net income (loss)

$52,870

$(87,906)

$26,723

$(90,051)

$(246,798)

$9,527

Diluted EPS (loss)

$0.15

$(0.45)

$0.16

$(0.27)

$(1.26)

$0.06

* The results for the second quarter of 2015 include Spansion operations for the full quarter, while prior periods presented do not, as the Spansion merger was completed on March 12, 2015.

** For a reconciliation of GAAP to non-GAAP results, see accompanying tables “Reconciliation of U.S. GAAP to Non-GAAP Financial Measures.”

*** Non-GAAP revenue includes $6.25 million of Samsung intellectual property licensing revenue, not included in GAAP revenue as a result of the effects of purchase accounting for the merger.

We are pleased to announce strong financial results for the second quarter of 2015, our first full quarter as a combined company. Our non-GAAP earnings per share of $0.15 represents a record relative to the last 10 quarters of the Cypress and Spansion pro forma combination. Our sales force is actively cross-selling products from our expanded product portfolio. As a result, we have begun to see an increase in new opportunities at top-tier customers, particularly in the automotive market.

We have continued to make excellent progress on integration. We have exited 19 of the 27 sites planned for closure, reduced our combined headcount by 833 people and achieved $51.6 million in annualized synergies in the second quarter—ahead of our plan to achieve $160 million in synergies.

The combined Cypress-Spansion sales force ramped up its effort to cross-sell products from Cypress’s expanded product portfolio during the second quarter, securing multiple key design wins and design opportunities at a pace that exceeded internal projections. Cross-selling is a key part of Cypress’s stated goal to take advantage of product and business synergies to grow both our top and bottom lines. The effort was augmented by training more than 600 Cypress sales personnel and distribution partners at multiple regional Sales Conferences.

As one cross-selling result, a Tier 1 auto maker selected not only the Traveo™ automotive MCU, the HyperRAM™ and HyperFlash™ memories, and an analog Power Management IC (PMIC)—former Spansion products—but also a Cypress PSoC® programmable system-on-chip, for the infotainment cluster of its next-generation models. This win is particularly noteworthy in that former Spansion products opened the door for Cypress’s longtime flagship PSoC products. This is a dynamic we expect will repeat itself as customers become more familiar with the synergies of our new product portfolio.

BUSINESS REVIEW

Our non-GAAP consolidated gross margin for the second quarter was 41.0%, meeting our expectations at this point in the merger. Excluding our Emerging Technologies Division (ETD), our core semiconductor gross margin was 41.6%.

Net inventory at the end of the second quarter was $300.9 million, down $88 million from the first quarter ($52 million excluding the impact of fair value inventory adjustment from the merger), as a result of our 2015 lean inventory initiative.

Cypress announced that its Board of Directors approved a quarterly cash dividend of $0.11 per share, payable to holders of record of the company’s common stock as of the close of business on June 25, 2015. This dividend was paid on July 16, 2015.

Cypress began sampling the newest member of its family of power management integrated circuits (PMICs) targeting Energy Harvesting applications for the Internet of Things. The new Cypress PMICs, designed and developed by Spansion, are optimized for energy harvesting from ambient light, heat or vibrations to eliminate the need for batteries in wireless sensor nodes (WSNs) that monitor physical and environmental conditions in smart homes, buildings and factories.

Cypress expanded its Spansion-designed NOR HyperFlash product line with the qualification of a new 256Mb memory. The 3-V HyperFlash device is the latest addition to the industry’s first flash memory family that supports the high-bandwidth, low-pin-count HyperBus™ interface. Running at frequencies up to 166 MHz, HyperFlash products can achieve Double-Data-Rate (DDR) read bandwidths as high as 333 MBps.

Cypress introduced two reference design kits (RDKs) based on its Programmable Radio-on-Chip Bluetooth Low Energy (PRoC™ BLE) solution for Bluetooth Smart applications; the kits provide feature-rich, production-ready implementations of RF remote controls with long battery life, the latest industry trend. The CY5672 RDK provides a remote control with a trackpad, motion-sensing and voice recognition, and the CY5682 RDK provides a touch mouse that works with all major operating systems.

Cypress and Arrow Electronics announced the winners of their joint design contest, which challenged engineers to design solutions for the IoT using Cypress’s PSoC 4 BLE, the industry’s most-integrated programmable one-chip Bluetooth Smart solution. A data collection and logging system that displays the battery usage for an electric bicycle earned the top prize.

Cypress is the leader in the new USB Power Delivery field with its EZ-PD™ CCG1 and EZ-PD CCG2 USB Type-C controllers, which has passed the USB Implementers’ Forum (USB-IF) certification test. The new super-slim 2.4-mm USB Type-C connector—which transmits multiple data protocols and delivers up to 100 W of power—is rapidly being adopted. For example, a USB Type-C connector is the sole data and power connector on the newest Apple® MacBook® computer.

Leading Japanese electronics publication Semiconductor Industry News honored the EZ-PD CCG1 and EZ-PD CCG2 USB Type-C controllers as part of the publication’s 21st annual “Semiconductor of the Year” awards. The publication’s editors chose the Cypress solutions for the “Award for Excellence” because of their high quality and ability to meet the accelerating demand of the USB Type-C market.

Cypress announced two complete silicon and software solutions for USB Type-C adapter dongles based on its EZ-PD CCG1 controller. The first solution enables dongle connectivity to a DisplayPort (DP) or Mini DisplayPort (mDP) receptacle, allowing emerging Type-C notebooks and monitors to work with older products. The second solution enables connectivity to HDMI/DVI/VGA receptacles and older displays. In addition, Cypress expanded its USB Type-C design support with the new CY4501 CCG1 Development Kit (DVK), which enables designers to add USB Type-C connectivity to any system.

Cypress introduced the industry’s only 4Mb serial Ferroelectric Random Access Memories (F-RAMs™), which are the highest-density products of their kind available. Cypress F-RAMs are ideal solutions for applications that require continuous or frequent high-speed reading and writing of data with absolute data security. The 4Mb serial F-RAM family records mission-critical data in medical, industrial and automotive applications.

Cypress announced availability of the industry’s highest-density synchronous SRAMs with on-chip Error-Correcting Code (ECC). On-chip ECC makes these SRAMs 1,000 times more reliable than standard SRAMs and eliminates the need for additional error-correction chips in medical and other mission-critical systems. Cypress will continue to expand the family this year with additional densities.

Cypress subsidiary Deca Technologies announced that it has shipped a cumulative 500 million units of wafer-level chip scale packages (WLCSP) since the subsidiary company’s launch. (Original Source)

Shares of Cypress Semiconductor closed yesterday at $11.16. CY has a 1-year high of $16.25 and a 1-year low of $8.04. The stock’s 50-day moving average is $12.18 and its 200-day moving average is $13.58.

On the ratings front, Cypress Semiconductor has been the subject of a number of recent research reports. In a report issued on July 17, Needham analyst Rajvindra Gill reiterated a Buy rating on CY, with a price target of $20, which represents a potential upside of 79.2% from where the stock is currently trading. Separately, on July 1, Credit Suisse’s John Pitzer assigned a Buy rating to the stock and has a price target of $15.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Rajvindra Gill and John Pitzer have a total average return of 15.5% and 17.8% respectively. Gill has a success rate of 52.0% and is ranked #163 out of 3713 analysts, while Pitzer has a success rate of 63.3% and is ranked #174.